By: Mr. Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd.
Commodities remained on a strong turf despite increasing COVID-19 cases across the world. Investors seem to be betting on the opening up of the economies across the world, despite supply side constraints.
Gold
On Wednesday, Spot Gold prices ended higher by 0.81 percent to close at $1946.7 per tonne as escalating tension between U.S. & China amid rising numbers of infections around the globe dented the hopes of a paced economic recovery. Alarming increase in the covid-19 cases around the globe continues to weigh on the market sentiments. Reported cases around the globe have surged over 28 million and more than 908,000 have died. Widening impact of the pandemic on the global economy continued to boost the demand for the safe haven, Gold. The two days of ECB’s monetary policy meeting that ends on Thursday will be a matter of attraction as investors will look for cues on policymaker’s stance on the coming time considering the soaring Euro.
Crude Oil
On Wednesday, WTI Crude surged over 3.5 percent closing at $38.1 per barrel covering the significant losses made in the earlier trading session as markets analysed Crude to be oversold. However, Oil prices remained under pressure after top Crude exporter, Saudi Arabia, trimmed the Official Selling Price (OSP) to Asia for the month of October’20 considering the falling demand. OPEC & its allies are scheduled to meet on 17th September to review the Oil market scenario. OPEC+ trimmed the production cuts down to 7.7 barrels per day since August, considering the growing demand. But widening impact of the pandemic reflecting the surge in covid-19 cases around the globe clouded the outlook for Crude as the global Oil market struggled to recover from the economic slump. Uncertainties over the global economic recovery due to the pandemic are leading to an increase in Oil supplies around the globe while consumption still remains weak, putting pressure on Crude Oil.
Base Metals
On Wednesday, Base metals on the LME were mixed as worries over the global economic recovery and escalating tension between U.S. & China weighed on Industrial metal prices. The U.S. President suggesting to end all ties with China ahead of the U.S. election scheduled in November’20 further deteriorated the relations between the world’s largest economies. Growing tension between U.S. & China clouded the outlook for industrial metals. However, strengthening of China’s exports for the third consecutive month in August ’20 as the largest metal consumer continued to revive from the pandemic lows supported base metal prices. China’s refined zinc production in August’20 stood at 450,000 tonnes, 2.8 percent higher (yoy). Boost in smelter production considering the growing demand led to the increase in output.
Copper
On Wednesday, LME Copper ended higher by 0.99 percent closing at $6734.0 per tonne on the back of improving demand from China; however, a growing rift between U.S. & China and bleak growth prospects weighed on the prices.
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